Seeking ways to streamline business operations and spend less money is critical for most organizations, including the U.S. Government. The 2016 NDAA contains several approaches to help agencies cut costs and improve performance, but one in particular is focused on increased utilization of a streamlined purchasing method used by civilian, defense and intelligence agencies. If it’s still there when the latest DoD spending bill becomes law, it will result in transformative change to agency procurement and significant economic impact to the small business community everywhere.
– The Chief Visionary
State of the GSA and VA Federal Supply Schedule Programs
When you look at combined spending on the Federal Supply Schedule programs run by GSA and VA, total reported sales are roughly $240 billion over the last five completed fiscal years. Based on budget shrinkage and apparent changes in agency buying behaviors, the GSA FSS itself program shows a very obvious decline in reported sales, about $6 billion from FY10 to FY14. Nevertheless, the GSA Schedule is very well-known, it continues to be a viable tool for both Government and Industry, and is still a top destination for fiscal obligations.
But there is a possibility it could drop in the rankings based on current trends continuing, and a small piece of legislation making it into the 2016 NDAA.
‘Obscure’ Purchasing Method Growing Despite Budget Woes
During fiscal years FY10 through FY14 when overall agency spending declined by nearly $100 billion and sales against the GSA Schedule declined by six billion, another method of purchasing that’s never had the broad visibility of the GSA Schedule program has been slowly gaining steam. Very quietly and consistently this program that was designed specifically to help agency buyers realize efficiencies in contracting while creating additional opportunities for small business concerns to participate in government contracting, has grown while overall federal spending dropped. In fact, where the GSA Schedule programs lost six billion, this program gained five billion, averaging a $1 billion jump each fiscal year since FY2010.
Just in case you’re curious, FY15 is on the same trajectory as the previous five fiscal years. As I predicted, this purchasing method will break the $20 billion barrier this fiscal year. On top of that, we will see at least a one billion dollar increase over last year. Want to know a secret? We’ve already hit that mark for FY15!
I’m Not Talking MicroPurchases
Unless this is the very first time you’ve read one of my blogs, you know I’m referring to the purchasing program authorized under FAR Part 13 known as Simplified Acquisitions . It’s a topic I get pretty excited about. Why? Because I’ve sold this way, we advise other companies how to sell this way (one company gives us credit for helping them snag a $2.5 million Simplified Acquisition direct award from the Navy in FY14) and we teach lots of companies how leverage them as part of a balanced approach to their federal contracting strategy. Then there’s the part about the economic impact to small companies when comparing Simplified Acquisitions to the GSA Schedule. I’m still amazed at those results.
2016 NDAA Contains Gift for Government and Small Business
Now there’s something underway to completely change the landscape of federal contracting as it’s known today. In the House version of the 2016 NDAA there is language that will increase the ceiling of the Simplified Acquisition Threshold (SAT) from $150,00 to $500,000. There are so many peripheral benefits the small business community will realize from this, but let’s start with the reason why this might happen, which actually has nothing to do with small business. It’s about efficiency in contracting, one of the four tenets in the FAR as to why the Simplified Acquisition Procedures (SAP) exist. How cool is that? In an effort to do more with less, Congress may actually create benefits of monstrous proportions for small business concerns.
Monstrous: Understatement vs. Exaggeration (You’ll See!)
GSA Schedule sales from FY10 through FY14 accounted for about $240 billion in fiscal obligations. Obligations made using the Simplified Acquisition Procedures accounted for $83 billion during the same period. Should the increase to the SAT go through, Simplified Acquisition obligations would account for $50 to $80 billion in fiscal spending. This would be more than what’s obligated to the combined GSA and VA Schedule programs. As a matter of fact, even adding in GSA GWAC spending for FY10-FY14 ($16 billion) to include obligations made to STARS, STARS II, Alliant, Alliant SB and VETS, Simplified Acquisitions still comes out on top. That’s what I call a game-changer!
But Wait! There’s More! Seriously!
As if a proverbial bucket of money primarily reserved for small business concerns wasn’t enough, here are some of the other reasons this will be a big deal for small federal contractors if it survives the Congressional gauntlet:
- Majority of current obligations are awarded via purchase orders and definitive contracts versus contract vehicles and task orders which means a lower cost of entry for buys made this way
- Over seventy percent of obligated dollars are competitively awarded
- Average procurement life cycle is thirty to sixty days which contributes to a lower cost of pursuing and winning these opportunities
- Solicitation method is often Request for Quote versus Request for Proposal which typically means a lower level of effort to respond
Use Your Voice to Make This Happen (and Keep Your Fingers Crossed!)
Treat this as if an agency was coming out to identify ‘two or more viable small business concerns’ they would get offers from for a planned purchase and make yourself known! If you work for or lead a small business working in the federal sector, call your Representative or Senator to help them understand how significant this change will be for you and thousands, if not tens of thousands of American Small Businesses.
I can’t think of a better opportunity for small businesses to work together for a common goal that benefits us and our Nation’s economy.
Guy Timberlake, The Chief Visionary
“The person who says it cannot be done should not interrupt the person doing it.”